Airbus and Boeing Spar Over Latest WTO Subsidy Ruling

The World Trade Organization has upheld a ruling that Airbus received illegal government support for airliner programs, but clouded the issue by deciding that this does not apply to loans repaid with interest.

The World Trade Organization (WTO) has rejected much of Airbus’s July 2010 appeal against its ruling that the European airframer has unfairly benefitted from subsidies, but its May 18 judgment still leaves plenty of scope for the protagonists to argue over how it gets interpreted. The WTO’s Appellate Body found that funds provided by the governments of France, Germany, Spain and the UK for all of Airbus’s main airliner programs breached international trade agreements.

However, the Appellate Body did overturn an earlier ruling that loans repaid with interest to the governments concerned by Airbus constituted illegal subsidies, prompting Airbus to claim overall victory. Airbus argues that, essentially, the ruling covers all the funds in questions and so fundamentally undermines the legal case made by the U.S. side in the long-running WTO case. Boeing disagrees, claiming the appeal ruling to be “a clear, final win for fair trade that will level the playing field for America’s aerospace workers.”

According to the U.S. manufacturer, the funding that it says has now confirmed as illegal by the WTO totals $18 billion. Airbus rejects that calculation and declared the latest ruling “a big win for Europe.”

Next up for fans of the WTO’s interminable and byzantine process comes the expected February 2012 ruling on an appeal over a separate finding that Boeing had illegally benefitted from at least $5.3 billion in subsidies from U.S. federal and state governments. Then comes the small matter of what penalties and resolution the WTO might eventually demand, the timing of which remains unclear.